Ask the average small-business owner if he or she is concerned about embezzlement, and you'll probably get a response like "I don't have to worry about that because . . .
" . . . my employees are all good, honest people."
" . . . we're just a small company."
" . . . my people have all been with me a long time, so I know whom I can trust."
" . . . we don't handle cash."
If your answer matches any one of these statements, you're probably operating under a few misconceptions-misconceptions that could prove deadly to your business. You may believe that if there were an embezzler in your company, you'd somehow intuitively know it. You may believe an employee's attitude and demeanor are sufficient proof that he or she can be trusted with large sums of money. And you may not realize how common embezzlement is in small businesses.
"Small businesses are at greater risk than large businesses for embezzlement and other kinds of employee theft," says Joseph T. Wells, a CPA in Austin, Texas, and chairman of the Association of Certified Fraud Examiners. "In fact, I doubt there is a business in America that doesn't have thieves working for it in some capacity."
Because embezzlement appears to be a "clean" crime, it attracts a wide variety of people, including many who would never consider other types of crime. For example, psychological profiles of embezzlers show they are more likely to be female, married, and span a wider range of ages than other criminals. They are typically employed with a company for four to eight years before they begin to embezzle. Frequently, the embezzler is "the last person you would suspect."
Terri Singer, a CPA with Nemes, Allen & Co. in Bingham Farms, Michigan, is a certified fraud examiner who has worked in fraud detection for 14 years and specializes in internal controls for small businesses.